US Senate rejects Menendez bill to cut oil industry tax breaks

Sen. Bob Menendez’s bill to cut tax breaks for the five largest oil companies was rejected Thursday, just days after an overwhelming majority had voted to debate it.

Senate Minority Leader Mitch McConnell, R-Ky., accused Democrats of trying to stage “political show votes” because they would not allow any amendments to the bill, which would eliminate tax breaks worth an estimated $24 billion over the next 10 years.

“Is this the best we have to offer folks who are staring at $4-a-gallon on gasoline?” McConnell said before the vote. “A bill even Democrats admit won’t do anything at all to lower the price of gas? Is this the best we can do? And a process that blocks any other idea from even coming to the floor for a vote?”

President Obama had urged the Senate to support the bill. Speaking in the White House Rose Garden Thursday morning, Obama said that oil companies did not deserve subsidies because they were reaping bigger profits as the price of oil has spiked.

“It’s like hitting the American people twice,” Obama said. “You’re already paying a premium at the pump right now. And on top of that, Congress thinks it’s a good idea to send billions more of your tax dollars to the oil industry?”

Menendez, who like Obama is up for re-election this year, said his bill would use about half the money raised to lower the deficit. The rest would extend expired or expiring subsidies for alternative energy programs, which Menendez argued would eventually have an impact on gas prices.

“Alternative fuels -- propane, biodiesel, electric plug-in cars, among other fuel sources -- will be able to create competition that can create pressure on driving down gasoline prices,” Menendez, D-N.J., said in an interview after the vote.

He said opponents of the bill proved they were “in the pocket of Big Oil.”

“Anyone who can come to the floor and try to create an argument that the big five oil companies that will make $1 trillion over the next decade still need $24 billion in taxpayer subsidies is obviously beholden to Big Oil because there’s no rational argument for that,” he said.

Critics who came to the Senate floor to oppose the bill said that raising taxes on oil companies would not boost domestic production and could increase gas prices.

In several speeches during the week, Menendez countered that nonpartisan experts and oil industry executives have testified gas prices would not increase.

State Sen. Joseph Kyrillos, the New Jersey legislator seeking the GOP nomination to challenge Menendez in November, echoed his fellow Republicans in saying that more oil production is needed to bring prices down.

“Joe Kyrillos believes we need to encourage the growth of American energy so we can reduce our reliance on foreign oil. We do that by making it easier, not harder for companies to find new American sources of energy,” said Chapin Fay, spokesman for Kyrillos, R-Monmouth.

“However, there is not one single measure for production in this bill. This is not an energy bill, it is a tax bill and Joe would oppose it,” Fay said.

A procedural motion to end debate needed 60 votes but the final tally was was 51-47. Every Republican but two – Maine Sens. Susan Collins and Olympia Snowe – voted against it. Four Democrats also joined the opposition: Mark Begich of Alaska, Mary Landrieu of Louisiana, Ben Nelson of Nebraska and James Webb of Virginia.